Lucent Does Asia..............
March 2, 1999 6:11 AM EST
By Gabriella Faerber
Staff Writer
Lucent Technologies (quote, chart,
profile) turns three this year. But, there
are still a lot of people who don't know
about Lucent - especially people in
Asia. But, that may all be about to
change as Lucent goes head-to-head
with its competitors in the Pacific Rim.
"The main competitors in the Asia
Pacific region are Cisco (quote, chart,
profile) and to a lesser degree Nortel
(quote, chart, profile)," says Amala
Menon, telecommunications analyst
with International Data Corporation in
Singapore.
"Cisco is the leader for local area
network (LAN) products. Lucent is as
big a player in some markets as
Cisco. But whereas Cisco has moved
into switching equipment, Lucent has
not moved into LAN equipment,"
Menon says.
"Cisco has a better market strategy. It
is more aggressive, more close-knit.
Lucent is large and unwieldy so it
doesn't get the message across quite
so sharply. Lucent needs to get a
profile as a network vendor instead of
just as a switching vendor," she says.
Becoming a Household Name
But in the United States, Lucent is
bigger than Cisco, Ericsson (quote,
chart, profile) or Nortel. Lucent has a
market capitalization of some $100
billion and a cash hoard of around $1
billion.
When Lucent listed in April 1996, the
initial public offering (IPO) raised about
$3 billion in cash. That's the largest
IPO in US history.
Lucent may be a new name, but it has
been doing business for some 73
years under the watchful eye of parent
company AT&T (quote, chart, profile).
Lucent's annual revenue runs in the
region of $30 billion. That compares
with Cisco's revenue of around $8
billion.
The company has some three million
shareholders. That makes it the
second most widely held stock after
AT&T. Lucent stock has gained some
110% in the last year and in January
roared to an all-time high of $120 a
share.
In Asia, Lucent's presence is
comparatively small. Lucent has an
Asian workforce of around 7,000 in 13
countries. That compares with some
15,000 employees in 27 countries in
Europe, Africa and the Middle East.
But Lucent is very hungry for a piece of
the growing Asian pie for
communications systems and support
services. In 1997, that market was
worth some $100 billion.
And Lucent sees the Asia Pacific
region as the fastest growing region for
data networking space. By 2001,
Lucent estimates that it will be worth
some $160 billion for the company.
In the last three years alone, Lucent
has won contracts worth some $650
million in China. Lucent has also won
the contract to supply Singapore's
StarHub telecommunications company
with optical transmission equipment.
Demand for Lucent's core market of
circuit switching equipment is
declining, as fast as the demand for
data networking and wireless
equipment is increasing. Lucent is
quick to revamp its profile and is
aggressively moving into the data
networking market through a series of
strategic acquisitions.
In the past year or so, Lucent has
forked out some $6 billion to buy about
a dozen companies involved in data
networking technologies. Most
importantly, Lucent will acquire Ascend
Communications (quote, chart, profile),
the fourth largest maker of computer
networking equipment, for about $20
billion and Kenan Software Systems, a
US billing software firm, for $1.5 billion.
"Lucent's acquisition of Ascend is
seen as pivotal to its strategy of
increasing its market share and profile
in Asia. Ascend is a major player in the
region," says Menon.
Chief Operating Officer Ben
Verwaayen, the man heading Lucent's
global strategy, recently said "In order
to gain strength outside the US, we
need to have a deep understanding of
the markets and the forces driving
them.
"For instance, Asia is misunderstood
by many as being one large,
homogenous mass. This is untrue. Until
we stop thinking like that, we can never
be fully effective in foreign markets,"
says Verwaayen.
Different Country, Different
Strategy
In Malaysia, Lucent was one of the first
international multinationals to achieve
Multimedia Super Corridor (MSC)
status and sink its teeth into Malaysia's
initiative at the forefront of Malaysia's
push to leap into the Information Age.
And Lucent's R&D division, Bell Labs,
will be one of the major players in
training Malaysians at the MSC
University.
Lucent has also established its
regional center for GSM wireless
engineering and commercial
operations in Kuala Lumpur.
In Singapore, Lucent has recently
opened a $1 billion wafer fabrication
factory to produce digital signal
processors (DSPs). That project is a
joint venture with Chartered
Semiconductor. It has also recently
launched a range of LAN products in
Singapore.
For the year ending September 30,
Lucent says revenue in the
microelectronics group will likely grow
by between 20% and 25% in the Asia
Pacific region. Next year, revenue
should be up by about the same.
This year, Singapore, China, Taiwan
and South Korea performed well.
Japan reported the slowest growth
rate. Products in demand include
wireless handsets, modems, computer
hard disk circuits and laser products. |
